The European Union has announced that it is suspending $25million in aid for Afghanistan, warning that aid will be increasingly conditional on the government sticking to agreed reforms.

Payment of the $25 million aimed at reforming the justice system was deferred because of a lack of progress on the issue, EU ambassador Vygaudas Usackas said on Monday.

Usackas was speaking at the signing of a $76 million financing agreement on "efficient and effective governance" and "justice for all" with Afghan Finance Minister Omar Zakhiwal.

"If the European Union is deeply committed in supporting Afghanistan, it needs to stress that in the spirit of the Tokyo agreement, support will be increasingly conditional of the delivery of the Afghan government on the agreed reform agenda," Usackas said.

Donor nations meeting in Tokyo in July pledged $16bn for Afghanistan through 2015 to prevent the country from sliding into turmoil when foreign combat troops depart in 2014, but called on Kabul to implement reforms to fight graft.

The EU and member states had pumped $1.5bn a year into supporting Afghanistan's development over the past decade and were committed to maintaining at least that level after the withdrawal of NATO troops, Usackas said.

"An efficient administration, non-corrupted civil servants and a fair and balanced justice for every Afghan is the basis of a respected state," he said.

"That is the reason why the European Union is highly involved in those specific sectors."

Afghanistan's justice system is notoriously inefficient and corrupt, a failing that not only impacts ordinary Afghans but causes foreign and domestic investors to hesitate over commitments to the country's future.

Foreign aid accounts for most of Afghanistan's budget, and there are widespread fears that the cash will dry up along with the withdrawal of Western troops.

The EU is negotiating a cooperation agreement with the Afghan government covering commitments over the next 10 years, and the third round will be held in Brussels this week, Usackas said.